PHOENIX – Arizona will use $57 million from its share of settlements with mortgage lenders to help people facing foreclosure stay in their homes and provide counseling, legal assistance and oversight, Attorney General Tom Horne said Monday.
“Where they can make payments but they can’t make the full amount of the payments, that would be the ideal situation where we would try to keep people in their homes,” Horne said at a news conference.
Of that amount, $41 million will go toward homeowners through bridge loans and grants, principal-reduction programs, restitution, help in obtaining new mortgages and veterans housing programs, Horne said.
In February, 49 states and the federal government reached a settlement with five of the country’s largest lenders. It provides as much as $25 billion to distressed homeowners and direct payments to states.
That agreement settled investigations into whether lenders signed foreclosure documents without a notary public present and without verifying that the information in the documents was correct.
The share for Arizona government was $97 million, plus an additional $10 million in a separate settlement with Bank of America. Of that, the state legislature swept $50 million for the general fund.
Horne said he advised against the sweep.
“I thought the funds should be used for their originally intended purpose,” he said.
In a news release, state Sen. David Schapira, D-Tempe, the Senate minority leader, said Monday’s announcement means GOP leaders are refusing to return $50 million that should be helping homeowners.
“This hard-fought settlement is meant to help Arizona families who are struggling to keep their homes, not fund tax breaks for special interests,” the release said.
Horne said the remaining $16 million from the settlements will go toward enforcing terms of the settlement and providing legal services, education and counseling for homeowners.
“People who are facing foreclosure are 67 percent more likely to remain current on their mortgages if they receive that counseling,” he said.